“When I last updated the nation, in July 2019, the stock of external debt at end-June 2019 was US$10.23 billion. The stock has since increased to US$11.2 billion as at end December 2019. This was on account of new disbursements on existing loans mostly earmarked for infrastructure development” the Minister of Finance has said, during his state of the nation address.
The Minister says the stock of Government securities at end of 2019 was K80.2 billion from K60.3 billion at end-June 2019 saying the increase is explained by the issuance of Government securities to finance the budget deficit for 2019.
“The stock of domestic arrears, excluding VAT, amounted to K26.2 billion at end-September 2019 from K20.2 billion at end June 2019” he said.
On economic outlook, the Minister stated that economic growth in 2020 and the medium term is expected to be above 3 percent. Risks to the medium-term growth projection relate to climate change, particularly in the agricultural and energy sectors, ineffective implementation of fiscal consolidation measures and uncertainty in the global economy.
The fiscal deficit is expected to be around the projected 5.5 percent of GDP. This will be on account of measures Government is undertaking to enhance revenue collection as well as to deal with the debt portfolio. The Ministry will also give special focus in 2020 to funding social sectors particularly pensions, social cash transfer and health and education sectors whose allocation in 2019 was not met. Further the Ministry will focus efforts at domestic arrears dismantling.
Inflation is expected to remain high in the 1st half of the year on account of the pass-through effect of the exchange rate depreciation and the increase in fuel and electricity prices. The rate is expected to start tapering down in the second half of the year due to a reduction in food prices as fresh produce begins coming onto the market.
Dr. Ng’andu explained that the government will continue implementing measures aimed at stabilising and augmenting external reserves. The measures include reducing outlays on debt service, Bank of Zambia purchases of foreign exchange from the market as well as purchases of gold as a reserve asset.
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